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Exodus, Metromedia shares hit new lows

Shares in the Internet infrastructure companies tumble to 52-week lows after analysts issue more negative comments.

    Shares in Internet infrastructure companies Exodus Communications and Metromedia Fiber Network tumbled Monday after analysts issued more negative comments.

    Exodus closed down $1.01, or 22 percent, to a 52-week low of $3.60 after Lehman Brothers analyst Harry Blount cut his fiscal 2002 sales target to $2 billion from $2.5 billion and chopped his 12-month price target to $9 a share from $15 a share. Earlier in the day shares touched $3.45.

    "We believe the previously announced cost reductions and lower (capital expenditures) will allow (Exodus) to reach cash flow positive," Blount wrote in a research note. "However, the company must begin demonstrating progress in the second quarter."

    Metromedia Fiber Network, the parent company of data-hosting company AboveNet Communications, plunged $1.39, or 40 percent, to close at a 52-week low of $2.10 after Goldman Sachs analyst Matthew Janiga lowered sales and earnings targets and clipped his price target to $10 a share from $23 a share. Earlier in the day shares touched $1.87.

    Janiga cut the company's sales and EBITDA (earnings before interest, taxes, depreciation and amortization) estimates for the second quarter and all of fiscal 2001 and 2002. He now expects sales to come in around $410 million for fiscal 2001 and $836 million for fiscal 2002.

    "We believe the company is exposed to the macro weakness in the Internet structure services sector," from which Metromedia derived 74 percent of its total sales in the first quarter, Janiga wrote in his research report. "Also, though we believe the probability that the company will secure needed funds in the near term is high, there are still a number of outstanding risks that could weight its shares in the near term."

    The sobering comments and subsequent stock contractions underscore the difficulties facing Web hosting and Internet services companies, which continue to lose cash-strapped dot-coms as customers and are experiencing their own cash flow problems.

    Last month, Exodus announced it would cut 15 percent of its work force as part of a cost-cutting move.

    In its latest quarter, Exodus posted a loss of $649.6 million, or $1.21 a share, on sales of $348.7 million.

    Metromedia Fiber posted a loss of $148.3 million, or 26 cents a share, on sales of $77 million.